SHOW WORK! :) Ruby is 25 and has a good job at a biotechnology company. She curr
ID: 2646586 • Letter: S
Question
SHOW WORK! :)
Ruby is 25 and has a good job at a biotechnology company. She currently has $10,000 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 8 percent, and she plans to leave it untouched until she retires at age 65. Ruby estimates that she will need $875,000 in her totalretirement nest egg by the time she is 65 in order to have retirement income of $20,000 a year (she expects that Social Security will pay her an additional $15,000 a year).
a. How much will Ruby
Explanation / Answer
Answer:
A) Future value of $10000 that grows by 8% for 40 years (65 years -25 years) = $10000 * (1 + 0.08)^40
= $10000 * 21.7245 = $217245.21
B) Total Required fund at the end of year 40 = $875000
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